The press release from the USDOJ stated fifteen people were busted in the scheme.
“Fifteen individuals, including two former company owners, were charged in a superseding indictment unsealed today for their alleged participation in a scheme to defraud investors in the United States and worldwide by fraudulently marketing approximately $140 million in financial instruments known as “binary options,” announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge Timothy R. Slater of the FBI’s Washington Field Office.
“Yakov Cohen, 27; Yosef Herzog, 54; Ori Maymon, 33; Nissim Alfasi, 33; Elad Bigelman, 37; Runal Jeebun, 29; Sabrina Elofer, 28; Afik Tori, 27; Anog Maarek, 28; Oron Montgomery, 38; David Barzilay, 41; Gilad Mazugi, 36; Hadas Ben Haim, 34; Yousef Bishara, 32; and Nir Erez, 29, all current or former residents of Israel, were charged in an indictment returned in the District of Maryland with one count of conspiracy to commit wire fraud and three counts of wire fraud. Maarek appeared Friday before U.S. Magistrate Judge Timothy J. Sullivan in the District of Maryland. Maarek was extradited from Hungary, after his arrest in September 2019, by Hungarian law enforcement.”
The scheme started in 2014 and involved two websites, BinaryBook and BigOption, according to the release.
The press release continued, “The indictment alleges that the defendants and their co-conspirators all worked for an Israel-based company called Yukom Communications, a purported sales and marketing company. The indictment further alleges that Cohen and Herzog had ownership interests in Yukom Communications and other related entities that were used to perpetuate the fraud scheme.
“As alleged in the indictment, the defendants and their co-conspirators misled investors by falsely claiming to represent the interests of investors when, in fact, the owners of Binary Book and Big Option profited when investors lost money. In addition, the indictment alleges that the defendants and their co-conspirators misrepresented the suitability of and expected to return on investments through Binary Book and Big Option, used false names and qualifications when talking to investors, and falsely claimed to be working from London when they were working from Israel. The indictment alleges the defendants and their co-conspirators also misrepresented whether and how investors could withdraw funds from their accounts and misrepresented the terms of so-called ‘bonuses,’ ‘risk-free trades’ and ‘insured trades,’ and deceptively used these supposed benefits in a manner that in fact harmed investors.”
Here is more from the indictment, “In truth and in fact, when investors lost money, Cohen and Herzog as principles of the Binary Options Organization, profited.”
This scheme involved binary options traded over the counter.
In the US, binary options are only legally traded on exchanges like NADEX and the Cantor Exchange.
Binary options are controversial and involve bets on the price of securities in the future where traders make all or nothing bets.
In Israel, where this scheme originated, binary options were banned in 2017.